Crypto's Liquid Staking Sector Rises to Near Record High with $15 Billion Surge
While investors continue to withdraw capital from the decentralized finance (DeFi) industry at large, one particular sub-sector is growing at breakneck speed. Here's the latest.
The total value locked (TVL) within liquid staking protocols has ballooned to $20 billion as of September 2022. That’s up from roughly $5 billion in June 2022 – a 292% increase.
According to DeFi Llama, most of that capital ($14 billion) is locked up with Lido, the market’s most dominant liquid staking provider. This makes Lido the number one DeFi protocol by TVL, with decentralized stablecoin provider MakerDao coming in a distant second at $5 billion.
“Staking” is when a crypto user locks away their assets within a proof of stake blockchain protocol to provide security for the network. Stakers are rewarded with periodic returns for the service of locking away their coins.
Staking generally poses a troubling technical barrier to entry, which even experienced developers like Vitalik Buterin have expressed discomfort with. Liquid staking services like Lido take this technical burden off of users’ shoulders, allowing anyone to reap the benefits of staking in return for part of the staking fees.
They also provide stakers with new assets backed 1:1 by the assets they’ve chosen to stake (Ex. stETH for ETH, or stSOL for SOL). This lets users effectively retain access to their assets while still earning yield from them.
Staking became possible on Ethereum’s mainnet in September 2022. Since then, total staked ETH surged from 13.9 million ETH to 29.3 million ETH – much of which is within liquid staking protocols.
Lido and Rocketpool saw their TVL peak at $21 billion in April 2022, shortly before the collapse of Terra detonated the crypto market, reducing the
Read more on cryptonews.com
